Guest Post: A Final Selection Day Update

A Close Race?

Predictions regarding the election outcome are all over the place. Dennis Gartman for instance thinks that 'Romney will win quite handily'. While this opinion may be largely informed by wishful thinking in this case, there are two interesting points made by Gartman. One concerns poll errors, something we have previously discussed in the context of the 1948 election, which was a pretty glaring failure of the polls. According to Gartman:

"First, he uses the the 1980 election as an example where Carter had a 2-3% point lead over Gov. Reagan. Carter was expected to win the race, but he did not."

If this is meant to illustrate the general principle that polls can be in error, then fair enough. If it is meant to equate Obama with Carter and Romney with Reagan, it is way off the mark. Just as a reminder: the 1980 election took place at the tail end of an inflationary economic crisis and Carter had to fend off a democratic challenger for the nomination (Ted Kennedy), who viciously attacked him for eight months. In addition there was of course the Iran hostage crisis and the botched rescue attempt, which hurt Carter's reelection chances immensely.

It goes without saying that Romney is no Reagan.

Another point made by Gartman concerns the Bradley (or Wilder) effect, which we had not heard of before. Apparently this is a kind of 'political correctness effect' (i.e., it is not motivated by racism, but by the fear of people that they might be seen as racist). It seems though that this effect may have been far greater in the 1980's when it was first posited to exist. Nowadays people are probably generally more relaxed about the race of political candidates.

“Gartman also refers to the Bradley/Wilder Effect, a theory where non-white candidates do better in the polls than the final election results show.”

Jim Cramer is taking the exact opposite view from Gartman's, expecting a 'landslide' victory for Obama. Of course Cramer wouldn't be Cramer if his forecast didn't stand out for being a bit extreme.

The Princeton election consortium's latest update of the meta-analysis of the electoral vote count on the eve of the election continues to predict an Obama victory as well, but clearly the race is getting tighter. The median estimator has dropped to the lower end of the 'strike zone' (a 68% confidence interval of probable outcomes based on today's polls).

According to the PEC's 'meta-analysis', Obama still enjoys a fairly comfortable margin, but it is not as big as it once used to be.

Intrade odds look fairly good for Obama, although they actually should be far higher this close to the election if traders were to hew more closely to what the analysis of the polls reflects. As Sam Wang of Princeton explains here, the election contracts traded at intrade suffer from inefficiencies that are likely due to the political biases of traders.

Obama's intrade odds are now at 65.8%, but they should actually be far higher based on the meta-margin analysis.

Of course the time when intrade bets pay off best is when the majority of traders turns out to be completely wrong and one has taken the other side of the trade. The rational trade in this case would be to buy the contract, but the bigger pay-off would result if one sold it short and it turns out on election day that the polls had it wrong. It would be a chance for Mr. Gartman to swing for the fences.

An Election Already Lost

If you want to get an impression of how some Europeans see the US and how deeply ingrained the socialist mentality is in Europe, we point you to an article in Der Spiegel, colorfully entitled 'America has already lost Tuesday's election'. The author opines that the 'outcome of the election won't matter to Europe', which is fair enough – it won't matter to anyone, after all. The only sense in which it matters to us is in how the markets might react in the short term to the outcome.

However, the author's theory that 'total capitalism' rules America and that it will 'destroy the country' is so utterly ridiculous as to almost leave one speechless. To equate the statist system that is in in place in the US of today with 'capitalism', much less 'total capitalism', is well beyond ridiculous. One might perhaps call it 'crony capitalism', but the problem with using such definitions is that they obscure the true meaning of the term capitalism. 'Crony capitalism' is a term that is employed as a euphemism for the more precise 'fascism', for fear that the latter might sound too extreme. The author of the Spiegel article informs us that the 'government is powerless in the US', an assertion that would probably induce slack-jawed amazement in most US citizens.

“Under laissez-faire capitalism, the state consists essentially just of a police force, law courts, and a national defense establishment, which deter and combat those who initiate the use of physical force. And nothing more.”

“[...] the politico-economic system of the United States today is so far removed from laissez-faire capitalism that it is closer to the system of a police state. The ability of the media to ignore all of the massive government interference that exists today and to characterize our present economic system as one of laissez faire and economic freedom marks it as, if not profoundly dishonest, then as nothing less than delusional.”

In Europe many people are more than just delusional regarding this particular point. There is unfortunately no constituency for economic freedom in most of Europe. Statism is too deeply ingrained (an exception to this rule are a number of former Eastern Bloc countries, where many people have developed an abiding hatred of the State due to suffering under communism's yoke for decades). There is however one point which the 'Spiegel' author gets right, namely his characterization of the stance of the two major US political parties and their candidates on foreign policy. He inter alia writes:

“In any case, it is wrong to characterize Republicans as the party of warmongers and Democrats as the party of peace.”

He has certainly got that right – as Justin Raimondo of anti-war.com often stresses, one can regard the two parties as the two faces of the same party, which he simply refers to as the 'war party'.

Speaking of statism, we want to refer readers to an excellent article at 'The Agitator', entitled 'Reminder: The Media Isn't Liberal, It's Statist'. The author shows by means of a few examples that it is actually incorrect to simply accuse the mainstream media of a 'liberal' (i.e., left-wing) bias, when the real problem is their utterly vicious statism, which can of course express itself in their reportage of both left-wing and right-wing causes. The examples he brings bring this point home in rather glaring fashion.

Bring Back Her Smile

Finally, there is at least one thing the end of the election circus will achieve: it will bring back little Abby's smile. She has simply had enough of the two clowns – they have driven her to shed desperate tears of frustration: